What is a blockchain fork? Soft and hard forks explained

5 July 2021


There are two kinds of forks found within blockchain, one is called soft fork while the other is called hard fork. Today, we will be exploring the difference between them and go over the pros and the cons of each option when it comes to the community as well as the developers.

Updates are a requirement in any piece of software, even open-source software such as the one that runs many blockchains.

However, when it comes to the free governance and structure of many of them, these upgrades to the code need to be first approved by the community and the nodes that secure the network. 

Blockchain forks occur when things don’t really go according to plan, and certain nodes or parties involved in the governance and upgrades disagree on the specific changes the developers have in mind.

Forks Explained

To truly get a grasp of how blockchain forks work, you need to understand which participants are involved in the decision-making process, known as governance, within the network.

Now, this is different depending on the blockchain in question, but we will be using Bitcoin again here, where these are split into three categories of participants, including:

  • The Developers – the ones responsible for the creation and the updates to the code itself.
  • The Miners – the ones that secure the network by running the cryptocurrency’s code and dedicating computer resources to add new blocks to the blockchain itself.
  • The Full Node Users – the ones that validate, send, and receive blocks and transactions while maintaining a copy of the blockchain itself.

The software fork, as a result, be it a hard fork or a soft fork occurs when the software is copied and then modified. The original project does indeed still remain online.

However, it is now separated from the new one, which takes a different approach to do so, typically due to a disagreement in how the parties involved wish to proceed with the project itself. 

It is like a single road that has split in two.

This is nothing new, and is commonplace alongside open-source projects and has been happening long before Bitcoin was even created. 

However, understanding the difference between a soft fork and a hard fork is important, so let’s dive a little bit deeper.

Hard Fork Explained

Hard forks are software updates that are backward-incompatible, which means that when they happen, nodes can add new rules in a way that conflicts with the rules of the old nodes. 

New nodes can only communicate with others that operate exclusively on the new version, and as such, the blockchain splits and creates two separate networks, one network that follows the old rules, while the other follows the new rules.

As such, after this fork has occurred, there will essentially be two networks that run in parallel, and they will both continue to propagate blocks as well as transactions; however, they will no longer work on the same blockchain. 

All of the nodes worked on an identical blockchain, up until the point of the forks, however, after it had occurred, they would have different blocks and transactions.

In other words, a hard fork is a radical change that results in two branches, the first branch follows the previous rules, and the second, the new branch follows the new rules. 

Holders of the tokens of the original blockchains are granted tokens in the new fork as well, however, they have to make the choice of which blockchain they would like to continue verifying. This hard fork can occur throughout any blockchain, not just Bitcoin.

Some examples, however, in the case of Bitcoin are Bitcoin Cash and Bitcoin SV.

Soft Fork Explained

When we discuss a soft fork as a point of comparison, it is a fork that is indeed backward-compatible, which means that the upgraded nodes can communicate with the non-upgraded nodes, and they will typically include a new rule that does not clash with any of the old rules, which is what still allows it to work.

This could be in the form of a block size decrease, which does not disconnect anyone from the network, as they can still communicate with the nodes that are not implementing this specific rule. 

In other words, this is a change to the software protocol rules where only the previously valid transaction blocks are made invalid, however, all of the old nodes will still recognize the new blocks as valid.

Hard Forks vs Soft Forks – Conclusion

Both of these types of forks essentially serve two different purposes. If there is a multitude of hard forks in a given blockchain project, it has the potential to divide the community.

Planned ones allow the freedom to modify the software in a way through which the entire community agrees upon, which results in a better outcome.

Furthermore, soft forks are considered as a less demanding change, however, developers are much more limited when it comes to what they can do due to the fact that the changes must not conflict with the old rules. 

That being the case, if the update can be developed in a way through which it can remain compatible with the previous rules, the network will not be fragmented and will work a lot more efficiently due to the fact that the risk of it getting hard forked is reduced.

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